2014‑15 Mid‑Year Report · The projections are presented in accordance with the Uniform Presentation Framework. Jodie Ryan Under Treasurer 22 November 2014. Overview 1. Chapter

2014‑15 Mid‑Year Report

ContentsUnder Treasurer’s Certification ii

Chapter 1 Overview 1

Chapter 2 Fiscal Outlook 3

Chapter 3 Economic Outlook 17

Chapter 4 Uniform Presentation Framework 23

General Government Sector Comprehensive Operating Statement 24

General Government Sector Balance Sheet 25

General Government Sector Cash Flow Statement 26

Public Non Financial Corporation Sector Comprehensive Operating Statement 27

Public Non Financial Corporation Sector Balance Sheet 28

Public Non Financial Corporation Sector Cash Flow Statement 29

Non Financial Public Sector Comprehensive Operating Statement 30

Non Financial Public Sector Balance Sheet 31

Non Financial Public Sector Cash Flow Statement 32

General Government Sector Taxes 33

2014-15 Loan Council Allocation 33

Appendix A Classification of Entities in the Northern Territory 35

Appendix B Glossary 36

Contents i

ii

2014-15 Mid-Year Report

Under Treasurer’s Certification

Under Treasurer’s CertificationIn accordance with the provisions of the Fiscal Integrity and Transparency Act, I certify that the financial projections included in the 2014-15 Mid-Year Report are based on Government decisions that I was aware of, or that were made available to me by the Treasurer, before 21 November 2014. The projections are presented in accordance with the Uniform Presentation Framework.

Jodie RyanUnder Treasurer

22 November 2014

1Overview

Chapter 1 Overview

Fiscal OverviewThe 2014-15 Mid-Year Report has been prepared in accordance with the Fiscal Integrity and Transparency Act (FITA), which requires the Treasurer to prepare and publicly release a mid-year fiscal outlook report each year that updates current budget projections.

The May 2014 Budget was developed on Government’s key fiscal objective of eliminating the fiscal balance deficit for the non financial public sector by 2017-18, and projected a small deficit of $39 million for 2017-18.

The 2014-15 Mid-Year Report continues this focus on fiscal consolidation and incorporates updated revenue projections, variations to tied Commonwealth funds and Government decisions made since the May 2014 Budget. The report also incorporates the effect of the 2013-14 outcome on the 2014-15 Budget and Forward Estimates. The key effect of the 2013-14 outcome was an improvement of around $300 million on the net debt position from that projected in May 2014.

Aside from the flow-on effect of reduced net debt, the projected outcome for 2014-15 is improved when compared to the May 2014 Budget. Increases in GST and own-source revenue have more than offset the carryover of expenditure from 2013-14, resulting in a revised fiscal balance deficit projection of $660 million for 2014-15. From 2015-16 the revenue and expense variations are somewhat offsetting, however overall there are modest improvements in the fiscal balance position of about $14 million in each year over the forward estimates period.

Table 1.1 sets out the key fiscal aggregates for the general government sector and non financial public sector including the 2013-14 outcome and the revised 2014-15 Budget and Forward Estimates.

Table 1.1: Key Fiscal Aggregates

2013-141 2014-15 2015-16 2016-17 2017-18

Outcome Budget Forward Estimates

$M $M $M $M $M

General government sector

Net operating balance 119 137 149 121 24

Non financial public sector

Fiscal balance - 90 - 660 - 79 - 39 - 25

Net debt 3 091 3 698 3 735 3 742 3 748

Net debt to revenue (%) 53 59 59 58 58

1 Mid-Year Report reflects actual outcome.Source: Department of Treasury and Finance

The fiscal highlights in the Mid-Year Report include:

• a general government operating surplus of $137 million in 2014-15 and remaining in a surplus position for all years;

• a non financial public sector fiscal balance deficit of $660 million in 2014-15 with modest and reducing deficits projected over the forward estimate period; and

• net debt plateauing at $3.7 billion from 2014-15 and net debt to revenue ratio for the non financial public sector below 60 per cent in all years.

Further information on the outcome and comparison between the estimates contained in this report and those projected at the time of the May 2014 Budget is provided in Chapter 2.

2


Overview

Economic OverviewThe Territory economy grew by 6.5 per cent in 2013-14, continuing the above-trend growth of recent years. This was the highest economic growth rate of all jurisdictions and compares with 2.5 per cent nationally. Growth was supported by higher levels of business investment, dwelling investment, household consumption and net exports.

Strong investment in the Territory’s resource sector in recent years is expected to continue to drive economic activity in 2014-15 when construction work related to the INPEX Ichthys liquefied natural gas (LNG) project is forecast to peak. Consequently, the Territory economy is forecast to expand at a robust pace of 6.0 per cent in 2014-15.

Economic growth in the Territory is forecast to ease to 3.0 per cent in 2015-16 and remain around historical trend levels in the outer years. From 2015-16, business investment is forecast to decline and return to long-term average levels. This is, however, expected to be offset by substantial increases in net exports as major resource projects transition to the production and export phase.

Conditions in the Territory’s labour market are expected to remain positive in 2014-15 as economic activity remains buoyant. However, from 2015-16, employment conditions are expected to soften as the Ichthys LNG project transitions to the less labour-intensive phase. This is expected to lead to moderating employment growth and a rise in the unemployment rate. However, the Territory’s unemployment rate is expected to remain low relative to other jurisdictions.

The Darwin consumer price index moderated during 2014, largely due to lower growth in the cost of housing, specifically rent, house purchase and utilities. Darwin inflationary pressures should continue to ease over the forward estimates period. This reflects an expected softening in labour market conditions and slower population growth as the Ichthys LNG project transitions from the construction to the production phase. Growth in house purchase prices and rents are also expected to slow due to increased supply of new dwellings combined with further housing developments in the Territory.

Table 1.2: Key Economic Forecasts (%)

2013-14 2014-15 2015-16 2016-17 2017-18

Budget Actual Estimate Forecast

Gross state product1 5.0 6.5 6.0 3.0 4.0 3.5

Population2 2.0 1.6 1.6 2.6 1.0 1.0

Employment3 3.7 4.3 3.5 2.1 0.7 0.7

Unemployment rate4 4.4 4.4 4.0 4.2 4.7 4.7

Consumer price index5 3.9 3.9 3.0 2.8 2.5 2.5

Wage price index5 2.9 2.9 3.0 3.0 3.0 3.0

1 Year ended June, year-on-year percentage change, inflation adjusted.2 As at December, annual percentage change.3 Year-on-year percentage change.4 Year average.5 As at December, year-on-year percentage change.Source: ABS; Department of Treasury and Finance

Further information on the comparison between the forecasts in this Report and those projected at the time of the May 2014 Budget is provided in Chapter 3.

3Fiscal Outlook

Chapter 2 Fiscal OutlookThis chapter addresses the requirement under section 10(1)(a) of the Fiscal Integrity and Transparency Act (FITA) that each fiscal outlook report contains updated financial projections for the budget year and the following three financial years for the general government and non financial public sectors.

In addition this chapter also provides:

• a comparison with the estimates provided in the previous fiscal outlook report, which was the May 2014 Budget;

• an assessment of the updated fiscal outlook against the fiscal strategy; and

• updated information on the Statement of Risks.

Updated Fiscal ProjectionsThe May 2014 Budget and forward estimates have been updated to reflect:

• the outcome of the 2013-14 financial year;

• Government decisions since the May 2014 Budget;

• revised Territory revenue estimates including GST revenue; and

• a range of other revenue and expense-related adjustments, largely due to the revised timing of Commonwealth-funded programs.

At the time of printing, Government was considering the sale of the Territory Insurance Office. Given no final decision had been made before this Report was finalised, the potential financial implications have not been included in the Mid-Year Report projections.

Key Fiscal Indicators – Operating StatementTable 2.1 presents the key general government and non financial public sector operating statement indicators for 2013-14 through to 2017-18, compared to the estimates provided in the May 2014 Budget.

Table 2.1: Key Fiscal Indicators – Operating Statement

2013-141 2014-15 2015-16 2016-17 2017-18


$M $M $M $M $M

General government sector

Net operating balance

2014-15 Budget - 31 63 99 69 1

2014-15 Mid-Year Report 119 137 149 121 24

Variation 150 74 50 52 23

Non financial public sector

Fiscal balance

2014-15 Budget - 394 - 723 - 92 - 53 - 39

2014-15 Mid-Year Report - 90 - 660 - 79 - 39 - 25

Variation 304 63 14 14 14


4


Fiscal Outlook

General Government Sector Net Operating BalanceAs shown in Table 2.1, the general government sector operating balance is projected to be both in a surplus position and improved in all years when compared to the May 2014 Budget.

The improved operating result is primarily due to increased revenue, partly offset by the carryover of expenses from 2013-14 and new policy decisions. The revenue increases are largely related to additional GST revenue to the Territory. In 2014-15 the higher GST receipts includes a one-off adjustment of $26 million relating to the 2013-14 year, which is to be received in 2014-15.

The improved position is further influenced by an increase in own-source revenue, largely payroll tax and stamp duty, offset by timing differences associated with tied Commonwealth funding received in 2013-14, and new policy decisions of Government.

Non Financial Public Sector Fiscal BalanceThe fiscal balance is influenced by the same factors affecting the general government operating balance. However, the fiscal balance includes capital payments and receipts and excludes depreciation.

Due to minimal changes in net capital payments in 2014-15, the underlying improvement in the operating balance in 2014-15 has flowed through to the fiscal balance for the non financial public sector, resulting in an improvement of $63 million when compared to the May 2014 Budget.

The change in the fiscal balance over the forward estimates period is less due to higher net capital payments in those years. This results in the fiscal balance being marginally improved by about $14 million in all forward years when compared to the May 2014 Budget.

As shown in Table 2.1, the fiscal balance deficit is projected to peak at $660 million in 2014-15 before reducing to a small deficit of $25 million in 2017-18. The key offsetting revenue and expense-related variations that have contributed to the movements in the fiscal balance are described in more detail below.

RevenueTable 2.2: Non Financial Public Sector – Revenue

2013-141 2014-15 2015-16 2016-17 2017-18


$M $M $M $M $M

Revenue

2014-15 Budget 5 823 6 096 6 245 6 414 6 376

2014-15 Mid-Year Report 5 847 6 253 6 315 6 474 6 414

Variation 24 157 70 60 39


Since the May 2014 Budget, operating revenue has increased in all years, as shown in Table 2.2. The main changes relate to the upward revision to GST revenue, taxation revenue estimates and tied Commonwealth revenue. Total operating revenue is projected to grow on average by 2.4 per cent per annum from 2013-14 to 2017-18, consistent with that projected at the time of the May 2014 Budget, from $5847 million in 2013-14 to $6414 million in 2017-18.

5Fiscal Outlook

GST RevenueThe parameters that influence the amount of GST revenue the Territory receives are national GST collections, the Territory’s share of the national population and GST relativities as recommended by the Commonwealth Grants Commission (CGC).

It is estimated that in 2014-15, the Territory will receive $3206 million in GST revenue, $77 million higher than estimated at the time of the May 2014 Budget. This upward revision reflects an increase in actual national GST collections in 2013-14, than the Commonwealth had projected in its Budget. The Territory’s share of this amount in 2014-15 is $51 million, together with a $26 million balancing adjustment that will be paid by the Commonwealth to the Territory in 2014-15.

In addition, while estimates of growth in national GST collections for 2014-15 and forward years remain unchanged from the May 2014 Budget, growth rates will be off the higher 2013-14 base, resulting in increased GST revenue estimates of around $50 million in all years. However from 2015-16 this is partly offset by a marginally lower estimated share of the national pool than predicted in May 2014.

Taxation RevenueTaxation revenue is the most significant component of the Territory’s own-source revenue and is predicted to increase in all years compared with May 2014 Budget projections.

This increase in taxation revenue is largely attributable to increases in payroll tax collected as a result of employment and wages growth, particularly among the larger employers making up the Territory’s payroll tax base.

In 2014-15, collections to date have been higher than anticipated and revised upwards by $14 million, with some flow-on across forward years anticipated.

Year-to-date collections in stamp duty on conveyances ($7.8 million) and gambling taxes ($2.6 million) have also contributed to an upward revision of revenue estimates. Collections are expected to maintain their forecast level of growth, resulting in a flow-on increase across the forward years.

Tied Commonwealth FundingThe remaining change in revenue estimates since the May 2014 Budget predominantly relates to tied Commonwealth funding, which has increased by $30.7 million in 2014-15. The increase in 2014-15 is due to the revised timing of, and additional funding for, the following programs: National Banana Freckle Eradication; National Disability; Essential Vaccines; Treating More Public Dental Patients; and Education for Immigration Detainee Children.

The main contributors to the variation in tied funding over the forward estimates include additional funding for the Northern Territory Solar Energy Transformation Program, Essential Vaccines and National Disability programs, partially offset by the cessation of funding for NT Jobs package and revised timing of Stronger Futures funding. These tied funding adjustments tend not to affect the fiscal outcome over time as increases in revenue are matched by a corresponding increase in expenditure, although timing differences may affect the outcome in particular years, as occurred at the end of 2013-14.

6


Fiscal Outlook

Operating Expenses and Net Capital PaymentsTable 2.3: Non Financial Public Sector – Operating Expenses and Net Capital Payments

2013-141 2014-15 2015-16 2016-17 2017-18


$M $M $M $M $M

Operating expenses

2014-15 Budget 5 896 6 026 6 114 6 296 6 311

2014-15 Mid-Year Report 5 783 6 116 6 137 6 307 6 327

Variation - 112 91 23 11 15

Net capital payments

2014-15 Budget 322 793 223 172 103

2014-15 Mid-Year Report 154 797 257 206 112

Variation - 168 4 33 34 9


Total operating expenses in 2013-14 was $5783 and is projected to grow on average by 2.3 per cent per annum over the forward estimates to $6327 million in 2017-18. This compares to 1.8 per cent annual growth at the time of the May 2014 Budget, however that was calculated off a higher 2013-14 base. Despite this, expenditure growth remains below revenue growth over the same period. In all years the growth in operating expenses incorporates the effect of parameters that are unchanged from the May 2014 Budget and are:

• wages – inflator;

• consumer price index (CPI) – inflator; and

• efficiency dividend – deflator.

The increase in operating expenses since the May 2014 Budget is largely reflective of adjustments to match the increases in tied Commonwealth funding. For 2014-15, the increase is more pronounced due to the carryover of expenditure from 2013-14 related to the timing of delivery of Commonwealth-funded programs. In all years the growth in operating expenses is moderated by the continuing effect of efficiency and reprioritisation measures on overall spending levels.

The growth in expenses also incorporates additional policy decisions made since the May 2014 Budget. Although offset by additional revenue, these decisions primarily relate to additional funding for the Northern and Central Australia Development Offices; Strategic Oil and Gas Project; Domestic and Family Violence Reduction Strategy; and the Strategic Defence Advisory Committee.

Net capital payments have increased in all forward years since the May 2014 Budget primarily due to the joint Territory and Commonwealth-funded $60 million Solar Energy Transformation Program in remote and regional areas of the Territory.

7Fiscal Outlook

Consolidated Table of Changes since May 2014Table 2.4 sets out changes in the fiscal balance for 2014-15 for the non financial public sector since the May 2014 Budget. Variations are categorised into policy and non policy variations. Policy variations are the result of Government decisions to implement or expand agency programs. Non policy variations are either due to influences outside the Government’s control, such as the timing of receipts from the Commonwealth, or changes in economic parameters.

Table 2.4: Variations to the Non Financial Public Sector’s Fiscal Balance since May 2014

2014-15

$M

2014-15 BUDGET FISCAL BALANCE - 722.6

REVENUE

Revenue – non policy

Stamp duty 7.8

Payroll tax 14.4

Other taxes 2.6

GST revenue 77.0

Tied Commonwealth revenue 30.7

Interest income 8.5

Other revenue 16.2

Total revenue – non policy 157.2 OPERATING EXPENSES

Expenses – policy

New and expanded policy decisions 20.0

Total expenses – policy 20.0

Expenses – non policy

Commonwealth expenses and transfers between years and to capital 86.7

Interest expense - 8.7

Other - 7.3

Total expenses – non policy 70.7

TOTAL OPERATING EXPENSES 90.7

Net Capital

Net acquisitions of non-financial assets 3.6

TOTAL NET CAPITAL PAYMENTS 3.6

TOTAL EXPENSES 94.3

TOTAL VARIATION 62.9

2014-15 REVISED FISCAL BALANCE OUTCOME - 659.7

Source: Department of Treasury and Finance

8


Fiscal Outlook

Since May 2014, a number of policy and non policy-related changes to revenue and expenses in 2014-15 have resulted in a $62.9 million improvement in the fiscal balance outcome since May 2014.

The non financial public sector revenue has increased by $157.2 million since the May 2014 Budget and total expenses have increased by $94.3 million. The main revenue variations since the May 2014 Budget are:

• an increase in taxation revenue of $24.8 million, which is largely attributed to increased payroll tax ($14.4 million) as a result of employment and wages growth, particularly among the larger employers making up the Territory’s payroll tax base, together with stamp duty collections ($7.8 million);

• an additional $77 million in GST revenue compared to the May 2014 Budget due to a one-off $26 million payment being made in 2014-15 related to the 2013-14 final national GST collections, and $51 million related to the higher GST pool base in 2014-15;

• revised timing of Commonwealth National Partnership (NP) and Commonwealth Own Purpose Expenditure (COPE) revenue ($30.7 million higher);

• increase in interest revenue of $8.5 million, reflecting higher returns on investments; and

• a one-off increase in other revenue totalling $16.2 million.

Non financial public sector operating expenses have increased since the May 2014 Budget by $90.7 million.

The key policy and non policy expense variations in 2014-15 are:

• policy decisions approved by Government since the May 2014 Budget totalling $20 million;

• Commonwealth payments and transfers between years and to capital of $86.7 million related to additional funding and revised timing of the delivery of Commonwealth-funded programs including the NP agreements on Remote Indigenous Housing and Improving Public Hospitals, and various programs under the Stronger Futures package; and

• reduction in interest expenses of $8.7 million reflecting the better than expected 2013-14 outcome and the Government’s revised borrowing program.

9Fiscal Outlook

Key Fiscal Indicators – Balance SheetTable 2.5: Non Financial Public Sector – Net Debt and Net Debt to Revenue Ratio

2013-141 2014-15 2015-16 2016-17 2017-18


Net debt ($M)

2014-15 Budget 3 406 4 066 4 117 4 139 4 159

2014-15 Mid-Year Report 3 091 3 698 3 735 3 742 3 748

Variation - 315 - 368 - 383 - 397 - 411

Net debt to revenue (%)

2014-15 Budget 58 67 66 65 65

2014-15 Mid-Year Report 53 59 59 58 58

Variation - 5 - 8 - 7 - 7 - 7


As shown in Table 2.5, net debt and net debt to revenue have improved in all years when compared to the May 2014 Budget.

The improvement in 2013-14 reflects the $304 million better outcome for the 2013-14 fiscal balance than projected in the May 2014 Budget. The improved outcome has flowed through to the forward estimates and together with other changes since May 2014 net debt is now projected to be $3748 million at the end of 2017-18, $411 million lower than the May 2014 Budget. As a result, the net debt to revenue ratio in 2017-18 is now estimated at 58 per cent, compared to 65 per cent in the May 2014 Budget.

Assessment of Updated Fiscal Outlook against the Fiscal StrategyThis section addresses the requirement under section 10(1)(g) of FITA that each fiscal outlook report is to contain an explanation of the factors and considerations that contribute to any material differences between the updated financial projections and the expected outcomes for the key fiscal indicators, as specified in the Government’s fiscal strategy statement.

The fiscal strategy is an important element in setting out and measuring adherence to a government’s fiscal objectives. The Territory’s fiscal strategy was revised in the May 2013 Budget, with the primary aim of returning the Territory Budget to a sustainable financial position by 2017-18. The strategy was developed against a background of a deteriorating fiscal position evidenced by the emergence of operating deficits, increased annual borrowing requirements and rising debt. The analysis in this chapter provides an assessment of the 2014-15 Mid-Year Report against the Government’s fiscal strategy, medium-term objectives and key fiscal indicators as set out in the May 2014 Budget.

10


Fiscal Outlook

Key Fiscal target: by 2017-18 the fiscal imbalance in the Territory’s non financial public sector is to be eliminated

The Government has adopted, as its immediate fiscal objective, the stabilising of the Territory’s debt burden by targeting the elimination of the overall fiscal deficit in the non financial public sector by 2017-18.

Table 2.6: Non Financial Public Sector – Fiscal Balance

2013-141 2014-15 2015-16 2016-17 2017-18


$M $M $M $M $M

Fiscal balance

2014-15 Budget - 394 - 723 - 92 - 53 - 39

2014-15 Mid-Year Report - 90 - 660 - 79 - 39 - 25

Variation 304 63 14 14 14


Table 2.6 shows the $304 million improvement in the 2013-14 outcome from the $394 million fiscal deficit projection in the May 2014 Budget. It also shows that the deficit is reducing over the forward years and is less than projected in the May 2014 Budget.

The improvement is largely the result of increases in GST and own-source revenue, although from 2015-16 these increases are partially offset by increases in net capital payments. Notwithstanding the improvement in all years, the 2017-18 fiscal balance is still projected to be a small deficit of $25 million. As such, continued focus on fiscal restraint is required to achieve the elimination of the deficit by the end of 2017-18.

Associated fiscal outcome: by 2016-17, the Territory’s general government sector is achieving a net operating surplus

The net operating balance is measured by the general government sector’s total annual revenues less total operating expenses including annual depreciation, a non cash expense. A net operating deficit indicates that total annual operating expenses exceed total annual revenues.

Table 2.7: General Government Sector – Net Operating Balance

2013-141 2014-15 2015-16 2016-17 2017-18


$M $M $M $M $M

Net operating balance

2014-15 Budget - 31 63 99 69 1

2014-15 Mid-Year Report 119 137 149 121 24

Variation 150 74 50 52 23


As shown in Table 2.7, the general government sector operating balance is projected to be in surplus and improved in all years when compared to the May 2014 Budget, with a surplus of $24 million projected at the end of 2017-18.

The improvement since the May Budget is driven by the same factors influencing the fiscal balance outcome with the exception of the increase in capital spending.

The surplus position predicted in all years, combined with the $119 million surplus achieved in 2013-14, means this element of the strategy has been achieved a full three years ahead of the 2016-17 target.

11Fiscal Outlook

Associated fiscal outcome: by 2016-17, taxation effort in the Territory’s general government sector is more on par with the average effort of the states

This measure is a lagging indicator as the Commonwealth Grants Commission updates the information annually in February based on financial data from two years ago. Therefore, the Territory’s taxation effort remains at 84 per cent as presented in the May 2014 Budget. The policy changes of re-targeting home assistance stamp duty measures, together with increases in motor vehicle registration fees implemented in 2012-13, has increased taxation effort from 78 per cent in 2011-12. It is expected that when the full year effect flows through, the assessed taxation effort in future years will be even closer to being on par with the average of the states (that is, 100 per cent).

Figure 2.1: Revenue Raising Effort – General Government Sector

Source: 2002-03 to 2006-07 from CGC 2009 Update; 2007-08 from CGC 2012 Update; 2008-09 from CGC 2013 Update; 2009-10 to 2012-13 from CGC 2014 Update

Associated fiscal outcome: by 2016-17, the Territory’s government owned corporation is moving towards commercial rates of return on capital employed

Estimates contained in Power and Water Corporation’s (PWC’s) 2014-15 Statement of Corporate Intent remain largely unchanged since the May 2014 Budget, however as reported in the Treasurer’s Annual Financial Report (TAFR), improving revenues and operating efficiencies has resulted in an improved return on assets (2.32 per cent) when compared to the 2013-14 estimate of 0.88 per cent.

As foreshadowed in the TAFR, work is continuing on the Government’s utility reform agenda, which includes regulatory reform of the sector along with structural separation of PWC into three distinct governments owned corporations. While the entities (Territory Generation, Jacana Energy and PWC) have commenced operations, elements of the restructure are yet to be finalised, therefore a further update on this component of the Government’s fiscal strategy will be provided as part of the 2015-16 Budget. Based on the 2013-14 outcome, further improvements are still required to achieve a commercial rate of return of around 6 per cent by 2016-17.

70

75

80

85

90

95

100

105

02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13

%

12


Fiscal Outlook

Associated fiscal outcome: by 2020, the Territory’s non financial public sector net debt as a percentage of revenue is returning towards 60 per cent

As shown in Figure 2.2, the net debt to revenue ratio for the non financial public sector at the end of 2013-14 was 53 per cent, an improvement of 5 percentage points from that projected in the May 2014 Budget.

Figure 2.2: Non Financial Public Sector – Net Debt to Revenue

Net debt and net debt to revenue are still projected to increase over the forward estimate period, largely related to the recognition of the finance lease liability associated with the $521 million Darwin Correctional Facility in 2014-15. However the projections have improved significantly since the May 2014 Budget, reflective of the better than expected 2013-14 outcome, combined with the improved fiscal balance position in this Report. The net debt to revenue ratio in 2017-18 is now expected to be 58 per cent compared to 65 per cent projected in the May 2014 Budget.

Therefore the Government is projected to achieve this element of the fiscal strategy well before the 2020 stated target. The challenge now will be for Government to maintain the net debt to revenue ratio below 60 per cent.

2014-15 Budget 2014-15 Mid-Year

50

55

60

65

70

13-14 14-15 15-16 16-17 17-18

%

13Fiscal Outlook

ConclusionOverall, despite ongoing demand for increased services, the Mid-Year Report highlights improvements in all measures when compared to the May 2014 Budget. The updated projections continue to maintain an improving trend towards the key fiscal objective of eliminating the fiscal deficit by 2017-18. The gains made by Government are also evidenced by the improved 2013-14 outcome and that two of the associated fiscal outcomes have been achieved well before their target dates as summarised in the table below.

Despite the improvement in all measures, achieving a fiscal balance by 2017-18 will require a continued focus on sound financial management.

Table 2.8: Fiscal Strategy Outcomes

Fiscal Target/Outcome2014-15

Mid-Year Report Assessment

By 2017-18 the fiscal imbalance in the Territory’s non-financial public sector is to be eliminated

$660M deficit in 2014-15 reducing

to $25 million by 2017-18

When compared to the May 2014 Budget, the fiscal balance has improved by $63 million and only a modest fiscal deficit of $25 million is projected in 2017-18.

By 2016-17, the Territory’s general government sector is achieving a net operating surplus

$119 million surplus achieved

in 2013-14

The operating balance returned to surplus in 2013-14, three years ahead of the fiscal strategy target. Operating balance in surplus in all forward years and by 2016-17 is projected to be a $121 million surplus.

By 2016-17, taxation effort in the Territory’s general government sector is more on par with the average of the states

84% The Territory’s taxation effort improved in 2012-13 from 78% (the latest year assessed by the CGC), following increases in tax collections as well as mining royalties.

By 2016-17, the Territory’s government owned corporation is moving towards commercial rates of return on capital employed

3.5% The 2014-15 estimate of 3.5% demonstrates a trend towards a commercial rate of return (estimated to be 6% of capital employed). The estimates are largely unchanged since the May 2014 Budget.

By 2020, the Territory’s non financial public sector net debt as a percentage of revenue is returning towards 60%

Net debt to peak at 59% in 2014-15

The improved 2014-15 projection is consistent with the improved fiscal balance position and is now, in all forward years, below the 60% target by 2020.

Source: Department of Treasury and Finance

Risks to the Updated Financial ProjectionsAs required under section 10(1)(e) of FITA, each fiscal outlook report is required to contain ‘a statement of the risks, quantified as far as practicable, that could materially affect the updated financial projections, including any contingent liabilities and any Government negotiations that have yet to be finalised’.

This section outlines the potential effect of risks to the Budget due to changes in revenue and expense estimates, and the likelihood of contingent liabilities becoming actual liabilities. Any changes in risks or liabilities that is apparent since the May 2014 Budget are also identified.

14


Fiscal Outlook

RevenueGST RevenueGST revenue continues to be the Territory’s most significant revenue source, accounting for around 50 per cent of total Territory revenue. Consequently, volatility in GST revenue is the main revenue risk for the Territory, and changes in GST revenue estimates can significantly impact the Territory’s budget outcome and capacity to deliver government services.

The Territory’s GST entitlement is determined by three parameters: national GST collections, the Territory’s share of the national population and GST relativities as recommended by the CGC. Each of these parameters is influenced by many variables, adding to the complexity of forecasting GST revenue to the Territory over the forward estimates period.

Risks regarding fluctuations in the parameters that effect the Territory’s GST revenue remain unchanged from those included in the May 2014 Budget.

Other Commonwealth Grants and Subsidies Commonwealth funding is provided under either the Intergovernmental Agreement on Federal Financial Relations (IGA) through specific purpose payments (SPPs), National Health Reform (NHR) payments, Students First – A Fairer Funding Agreement (Students First) payments and NP payments, or through Commonwealth Own Purpose Expenses (COPE) provided directly to agencies. These arrangements provide a degree of certainty for the Territory’s budgeting, although continuation of funding and adequacy of indexation in terms of capturing cost growth remains an ongoing risk.

For example, the Commonwealth’s 2014-15 Budget included key decisions to modify or terminate a number of payments to states that were considered unsustainable or ineffective, resulting in a decrease of funding to the Territory. In 2014-15 the impact of these decisions on the Territory was a $22.5 million reduction in Commonwealth funding. With the potential budget issues prevailing at the Commonwealth level, there is a further risk to all state and territory-tied and untied agreements of reduced funding levels if these funds are used to achieve revised priorities of the Commonwealth. The Territory is set to face increased ongoing uncertainty if the Commonwealth continues to make unilateral decisions to reverse earlier Commonwealth funding commitments.

Own-Source RevenueThe amount of revenue received from Territory taxes and royalties is dependent on the performance of the Territory economy and other external factors. Forecasting such revenue involves judgments and assumptions being made about the performance of the various economic factors and indicators that impact directly on Territory taxes and royalties, such as growth in wages, employment, average hours worked, prices, market activity and exchange rates.

The risks in forecasting the various elements of the Territory’s own-source revenue remains unchanged from those included in the May 2014 Budget.

Expenses and PaymentsThe forward estimates for expenses are based on known policy decisions with adjustments for non policy changes.

The parameter for wages growth in all forward years is 3 per cent and CPI is 2.5 per cent, these have remained unchanged since the May 2014 Budget. The efficiency dividend also remains unchanged in 2014-15 and all forward years at 1 per cent.

The most significant risk to the expense estimates is increasing budget pressure due to increased cost and demand influences. Furthermore, a range of agency savings initiatives have been factored in the May 2014 Budget and forward estimates. The risk to the budget outcome will be influenced to the extent that these measures are not achieved.

15Fiscal Outlook

In addition, future enterprise bargaining agreements represent a risk to the Budget if the outcome of negotiations is over and above those already factored into the forward estimates.

In accordance with FITA, the May 2014 Budget included forward estimates up to 2017-18. There is the potential for fiscal aggregates beyond the forward estimates period to be affected by existing commitments. These could either take the form of recurrent costs that are not expected to crystallise until later in the forward estimates period, recurrent initiatives that roll out over time and have therefore not yet reached their peak of funding, or capital infrastructure for which the associated recurrent costs are not fully incorporated into forward years as their completion falls either close to or outside of the forward estimates period.

Power and Water CorporationIncreases in electricity, water and sewerage tariffs combined with reduced operating and capital costs of PWC, which form the basis of its 2014-15 Statement of Corporate Intent, were factored into the May 2014 Budget and forward estimates. The extent to which PWC is unable to successfully implement these improvement measures represents an ongoing risk to the Budget. In addition, PWC has now been restructured into three distinct government owned corporations. While it is expected that this reform will result in additional operational efficiencies, there is a risk that there may be an initial impact on the estimates already factored into the Budget.

Contingent LiabilitiesContingent liabilities are potential future costs to Government that may arise from guarantees, indemnities, legal and contractual claims as they constitute a risk to the Territory’s financial position. The Territory’s contingent liabilities remain unchanged from the May 2014 Budget.

For more information on contingent liabilities, refer to Chapter 2 in the May 2014 Budget Paper No. 2: Budget Strategy and Outlook and the 2013-14 Treasurer’s Annual Financial Report.

16


17Economic Outlook

Chapter 3 Economic Outlook

Key Economic IndicatorsEconomic conditions in the Territory are generally consistent with forecasts in the May 2014 Budget with the main exception being gross state product (GSP), which was stronger than anticipated. However, revisions have been made to growth in employment and the wage price index (WPI) in the early part of the forecast period based on trends in recent data. The forecasts for the outer years remain the same.

Table 3.1 compares the forecasts for key economic indicators for the Territory in the May 2014 Budget and Mid-Year Report. Commentary on the changes to forecasts and recent trends in the key economic indicators are provided in this chapter.

Table 3.1: Key Economic Forecasts (%)

2013-14 2014-15 2015-16 2016-17 2017-18

Budget Actual Budget MYR Budget MYR Budget MYR Budget MYR

Gross state product1 5.0 6.5 6.0 6.0 3.0 3.0 4.0 4.0 3.5 3.5

Population2 2.0 1.6 1.6 1.6 2.6 2.6 1.0 1.0 1.0 1.0

Employment3 3.7 4.3 3.8 3.5 2.1 2.1 0.7 0.7 0.7 0.7

Unemployment rate4 4.4 4.4 4.0 4.0 4.2 4.2 4.7 4.7 4.7 4.7

Consumer price index5 3.9 3.9 3.0 3.0 2.8 2.8 2.5 2.5 2.5 2.5

Wage price index5 2.9 2.9 3.5 3.0 3.7 3.0 3.0 3.0 3.0 3.0

1 Year ended June, year-on-year percentage change, inflation adjusted.2 As at December, annual percentage change.3 Year-on-year percentage change.4 Year average.5 As at December, year-on-year percentage change.Source: ABS; Department of Treasury and Finance.

Economic GrowthThe Territory’s strong economic performance continued in 2013-14, with GSP increasing by 6.5 per cent. This result was driven by growth in business investment, dwelling investment, household consumption and net exports.

In 2013-14, the Territory recorded the highest GSP growth rate among the jurisdictions (Figure 3.1). The increase in GSP in 2013-14 in other jurisdictions ranged from 0.7 per cent in the Australian Capital Territory to 5.5 per cent in Western Australia. Nationally, gross domestic product grew by 2.5 per cent over the same period.

18


Economic Outlook

Figure 3.1: Change in Gross State Product and Gross Domestic Product

Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0

The outlook for the Territory economy is broadly consistent with expectations in the May 2014 Budget.

The forecast profile of economic growth for the Territory over the medium term is influenced by the timing of activity related to major resource projects, in particular the INPEX Ichthys liquefied natural gas (LNG) project. Onshore construction activity related to the Ichthys LNG project is expected to peak in 2014-15 and underpin solid growth in employment and population in the Territory until that time. Consequently, economic conditions in the Territory are expected to remain robust in 2014-15, with a growth forecast of 6.0 per cent.

Growth in Territory GSP is forecast to ease and return to historical trend levels from 2015-16 as spending on major resource projects slows, causing business investment to taper off from record levels. This is expected to lead to softening labour market conditions and slower population growth.

The contraction in business investment is forecast to be offset by a rise in net exports as resource projects transition to the operational phase and production and export volumes increase substantially. As a result, net exports are expected to lift Territory economic growth to around historical trend levels from 2015-16.

Household ConsumptionHousehold consumption in the Territory grew by 3.4 per cent in 2013-14, lower than the 3.9 per cent forecast in the May 2014 Budget. Growth was primarily supported by an increase in net expenditure interstate, as well as higher spending on rent and other dwelling services and health.

Household consumption growth is expected to moderate to 3.2 per cent in 2014-15. This is consistent with recent retail trade data, which shows that real annual growth in retail trade in the Territory has been relatively stable over the past year. Household consumption is expected to grow by 5.2 per cent in 2015 16, supported by strengthening population growth. From 2016-17, household consumption growth is forecast to be relatively flat consistent with the expected slowdown in economic activity in the Territory.

- 2

0

2

4

6

8

NSW Vic Qld WA SA Tas ACT NT Aust

2012-13 2013-14

%

19Economic Outlook

Dwelling InvestmentDwelling investment in the Territory rose by 39.4 per cent in 2013-14, nearly double the growth rate anticipated in the May 2014 Budget. Growth was supported primarily by record levels of residential unit construction in Palmerston and the Darwin central business district and adjacent suburbs.

A number of leading indicators point toward an easing in the level of dwelling investment in the Territory. The value of residential work in the pipeline and the number of dwelling units under construction in the Territory declined throughout 2013-14. Similarly, the number of residential building approvals in the Territory has fallen since October 2013, albeit from record levels. Despite this, the number of dwelling units under construction and the number of building approvals in the Territory remain well above historical levels.

The growth forecast for dwelling investment in the Territory has been revised down to incorporate the higher than anticipated 2013-14 result. However, despite the downward revision, forecast values of dwelling investment are relatively unchanged from the May 2014 Budget. Accordingly, the value of dwelling investment in the Territory is expected to ease over coming years and return to long-term trend levels by the end of the forecast period.

Business InvestmentIn recent years, business investment has been the largest contributor to growth in Territory GSP, reflecting the number and size of major projects, particularly in the resource sector.

In 2013-14, business investment increased by 6.0 per cent to $10.6 billion, the highest level on record. This result was higher than anticipated in the May 2014 Budget (2.5 per cent) and builds on exceptionally strong growth of 108.9 per cent in 2011-12 and 82.7 per cent in 2012-13.

A key driver of growth in business investment in the Territory has been the Ichthys LNG project. The Ichthys LNG project is expected to continue to heavily influence the outlook for business investment over the forward estimates period.

Business investment in the Territory is expected to decline sharply in coming years. This is partly due to the timing of progress payments for pre-assembled modules constructed overseas for the Ichthys project with the bulk of the payments having been made and incorporated in previous year’s business investment figures. Latest data on engineering construction activity, which has underpinned the recent surge in business investment, also shows a substantial moderation in growth over the past year.

Public Final DemandPublic final demand in the Territory increased by 0.7 per cent in 2013-14, compared with the estimate of a 1.5 per cent decrease in the May 2014 Budget.

Public investment declined by 11.4 per cent in 2013-14, while public consumption increased by 3.3 per cent. This trend is expected to continue over the forward estimates period. Public investment is forecast to retract from the high levels observed between 2009-10 and 2011-12, while growth in public consumption is expected to be relatively flat. As a result, public final demand is expected to decline at moderate rates over the budget and forward estimates period, reflecting the fiscal consolidation occurring at the Commonwealth and Territory government levels.

International TradeThe outlook is for net exports is unchanged from the May 2014 Budget. Net exports are expected to decline in 2014-15 due to the arrival of machinery and equipment imports related to the Ichthys project. This is forecast to change from 2015-16 with net exports estimated to grow strongly, coinciding with the commencement of LNG production from the Ichthys plant.

20


Economic Outlook

PopulationPopulation growth moderated to 1.6 per cent in 2013 following strong growth of 2.8 per cent in 2012. Growth in 2012 was boosted by record net overseas migration flows (4691 people), which have since moderated in 2013 (3196 people). Net overseas migration estimates for 2013 are, however, preliminary with further revisions by the Australian Bureau of Statistics expected to increase overseas migration numbers and result in some upward revision of population growth estimates for the Territory in 2013.

The population growth estimate for 2014 remains unchanged from the May 2014 Budget at 1.6 per cent. In the March quarter 2014, population growth was constrained with inflows from net overseas migration partly offset by strong outflows from net interstate migration. Interstate migration outflows are expected to be heightened in 2014 by departures associated with the curtailment of operations at the Gove alumina refinery. This is, however, expected to be balanced by inflows as employment opportunities from major projects draw workers to the Territory.

In the May 2014 Budget, Territory population growth over the period 2015 to 2017 was forecast to strengthen in 2015 (to 2.6 per cent) as the demand for labour associated with the Ichthys project peaked, then moderate in subsequent years (to 1.0 per cent) as the Ichthys project moves to the production phase. While it is expected that the pattern of growth will remain the same over this period, it is possible that levels of growth could be lower than forecast at budget time as some of the population benefits from the Ichthys LNG project may have occurred earlier than anticipated.

Labour MarketEmployment

Resident employment in the Territory grew by 4.3 per cent in 2013-14, stronger than the 3.7 per cent estimate in the May 2014 Budget. Employment growth was driven by a 5.5 per cent rise in full-time employment, partly offset by a 1.0 per cent decline in part-time employment.

Recent trends indicate a softening in employment growth led by a marked slowdown in growth in full-time employment. Reflecting the recent trends and higher than anticipated growth in 2013-14, employment growth in 2014-15 has been revised down from 3.8 per cent to 3.5 per cent.

From 2015-16 onwards, employment growth is expected to moderate to 2.1 per cent in 2015-16 and to 0.7 per cent in 2016-17 and 2017-18, in line with the expected timing of the transition of the Ichthys LNG project to the less labour-intensive production phase.

UnemploymentThe Territory’s unemployment rate averaged 4.4 per cent in 2013-14, in line with expectations in the May 2014 Budget.

In the first quarter of 2014-15, the Territory’s unemployment rate has continued to trend down, driven by a fall in the participation rate, and is expected to average 4.0 per cent in 2014-15. Consistent with the forecast softening in domestic economic activity and slowdown in employment growth, the Territory’s unemployment rate is expected to drift higher to 4.7 per cent in the subsequent years.

21Economic Outlook

Consumer Price IndexConsistent with the forecast in the May 2014 Budget, the annual growth in the Darwin consumer price index (CPI) moderated throughout 2014 (Figure 3.2). This was largely due to a slowdown in growth in housing costs, in particular rents, purchases for owner-occupier dwellings and utilities.

Figure 3.2: Annual Change in Consumer Price Index, Darwin and Eight Capital Cities

Source: ABS, Consumer Price Index, Australia, Cat. No. 6401.0

The outlook for the Darwin CPI remains unchanged from the May 2014 Budget. Growth in the Darwin CPI is expected to moderate from 3.9 per cent in 2013 to 3.0 per cent in 2014, 2.8 per cent in 2015 and 2.5 per cent in 2016 and 2017. This reflects a forecast softening in labour market conditions and slower population growth as the Ichthys LNG project transitions from the construction to the production phase. Additionally, the increase in supply of new dwellings combined with further housing developments in the Territory is expected to ease growth in house purchase prices and rents.

The outlook for the Darwin CPI may also vary due to fuel prices. In the first nine months of 2014, Darwin fuel prices were relatively stable, with the price of unleaded petrol averaging around 173 cents per litre. Since September 2014, unleaded petrol prices in Darwin have fallen by about 18 cents per litre. If lower fuel prices are sustained, this will detract from Darwin CPI growth in the short term. On the other hand, a lower exchange rate and increases in tobacco and fuel excises are likely to add to inflation.

Wage Price IndexWage growth in the Territory in 2014 is trending below expectations. Data on the Territory’s WPI for the first three quarters of 2014 point towards growth of about 3.0 per cent in 2014, compared with the forecast of 3.5 per cent in the May 2014 Budget.

Robust employment conditions in the Territory have not resulted in strong wages growth, particularly in the private sector. This would indicate that private sector demand for labour is being met through local, interstate and overseas sources.

In line with recent data, the growth in the Territory WPI has been revised down in 2014 and 2015 since the May 2014 Budget. The Territory’s WPI is expected to increase by 3.0 per cent per annum from 2014.

0

1

2

3

4

5

6

04 05 06 07 08 09 10 11 12 13 14 15

Year ended June

Darwin

8 Capitals

%

22


23Uniform Presentation Framework

Chapter 4 Uniform Presentation FrameworkUnder the Uniform Presentation Framework (UPF), the Commonwealth, state and territory governments have agreed to publish information in a standard format in their budget papers. The UPF is based on accounting standard AASB 1049 Whole of Government and General Government Sector Financial Reporting, which harmonises Government Finance Statistics and generally accepted accounting principles with the objective of improving the clarity and transparency of government financial statements.

The harmonised standard means that government financial reports are presented on the same basis by all jurisdictions, resulting in greater transparency and consistency.

The Fiscal Integrity and Transparency Act (FITA) requires that fiscal outlook reports be prepared in accordance with external reporting standards, including the Australian Accounting Standards or the UPF.

The tables in this chapter meet the Territory’s reporting obligations under both FITA and the UPF. They include, for the general government, public non financial corporations and non financial public sectors of government, a:

• Comprehensive Operating Statement;

• Balance Sheet; and

• Cash Flow Statement.

The financial statements include the original May 2014 Budget for 2014-15, revised 2014-15 Estimate and 2015-16 to 2017-18 Forward Estimates.

Also included are supplementary tables presenting general government sector taxes and the revised 2014-15 Loan Council Allocation.

24


Uniform Presentation Framework

Table 4.1

General Government Sector Comprehensive Operating Statement 2014-15 2014-15 2015-16 2016-17 2017-18

Budget Revised Forward Estimates

$000 $000 $000 $000 $000

REVENUE

Taxation revenue 568 607 593 205 607 062 619 091 635 514

Current grants 3 929 810 4 031 407 4 054 629 4 180 215 4 217 132

Capital grants 239 678 243 636 231 932 235 949 115 692

Sales of goods and services 261 750 265 152 275 446 274 523 271 779

Interest income 54 826 63 313 61 871 63 114 64 904

Dividend and income tax equivalent income 103 224 103 224 132 824 136 649 128 536

Other 212 054 233 587 209 235 208 733 207 647

TOTAL REVENUE 5 369 949 5 533 524 5 572 999 5 718 274 5 641 204

less EXPENSES

Employee benefits expense 1 993 375 2 027 016 2 056 300 2 107 733 2 114 259

Superannuation expenses

Superannuation interest cost 120 270 120 270 142 840 164 260 165 045

Other superannuation expenses 218 472 220 667 220 270 213 373 194 218

Depreciation and amortisation 316 222 318 431 327 464 333 283 339 559

Other operating expenses 1 325 471 1 338 414 1 353 957 1 435 190 1 437 598

Interest expenses 261 507 239 123 258 814 261 367 267 272

Other property expenses

Current grants 797 126 851 164 800 460 825 289 848 837

Capital grants 81 722 85 772 70 864 59 592 51 358

Subsidies and personal benefit payments 192 841 195 617 193 173 197 139 199 522

TOTAL EXPENSES 5 307 006 5 396 474 5 424 142 5 597 226 5 617 668

equals NET OPERATING BALANCE 62 943 137 050 148 857 121 048 23 536

plus Other economic flows – included in operating result 20 999 20 999 22 530 23 659 24 585

equals OPERATING RESULT 83 942 158 049 171 387 144 707 48 121

plus Other economic flows – other comprehensive income

547 432 529 977 377 986 211 877 232 491

equals COMPREHENSIVE RESULT – total change in net worth before transactions with owners in their capacity as owners

631 374 688 026 549 373 356 584 280 612

NET OPERATING BALANCE 62 943 137 050 148 857 121 048 23 536

less Net acquisition of non financial assets

Purchases of non financial assets 637 342 651 598 582 283 570 445 430 732

Sales of non financial assets - 74 779 - 74 779 - 54 917 - 73 024 - 71 562

less Depreciation 316 222 318 431 327 464 333 283 339 559

plus Change in inventories

plus Other movements in non financial assets 483 757 483 757

equals Total net acquisition of non financial assets 730 098 742 145 199 902 164 138 19 611

equals FISCAL BALANCE - 667 155 - 605 095 - 51 045 - 43 090 3 925


Table 4.2

General Government Sector Balance Sheet2014-15 2014-15 2015-16 2016-17 2017-18


$000 $000 $000 $000 $000

ASSETS

Financial assets

Cash and deposits 186 960 232 542 294 272 258 961 240 918

Advances paid 220 602 201 554 190 554 183 554 179 426

Investments, loans and placements 1 245 840 1 501 903 1 543 950 1 584 522 1 674 654

Receivables 184 899 267 526 272 974 279 414 279 611

Equity

Investments in other public sector entities 2 939 875 2 929 188 3 117 222 3 325 147 3 553 686

Investments – other 100

Other financial assets

Total financial assets 4 778 276 5 132 713 5 418 972 5 631 598 5 928 295

Non financial assets

Inventories 10 560 11 288 11 288 11 288 11 288

Property, plant and equipment 11 770 253 11 643 875 11 856 794 12 034 059 12 066 907

Investment property 84 578 85 786 82 379 79 222 76 065

Other non financial assets 123 021 122 370 122 358 122 346 122 334

Total non financial assets 11 988 412 11 863 319 12 072 819 12 246 915 12 276 594

TOTAL ASSETS 16 766 688 16 996 032 17 491 791 17 878 513 18 204 889

LIABILITIES

Deposits held 185 031 182 287 172 573 171 035 172 798

Advances received 360 096 345 095 305 147 294 564 286 578

Borrowing 3 770 950 3 773 065 3 918 475 3 938 027 3 983 900

Superannuation 3 040 806 3 239 056 3 078 003 3 091 784 3 095 895

Other employee benefits 579 787 597 641 603 641 607 641 608 641

Payables 153 480 188 548 189 239 189 365 190 368

Other liabilities 176 591 231 777 236 777 241 577 241 577

TOTAL LIABILITIES 8 266 741 8 557 469 8 503 855 8 533 993 8 579 757

NET ASSETS/(LIABILITIES) 8 499 947 8 438 563 8 987 936 9 344 520 9 625 132

Contributed equity

Accumulated surplus/(deficit) 1 218 993 1 141 416 1 498 803 1 643 510 1 691 631

Reserves 7 280 954 7 297 147 7 489 133 7 701 010 7 933 501

NET WORTH 8 499 947 8 438 563 8 987 936 9 344 520 9 625 132

NET FINANCIAL WORTH1 - 3 488 465 - 3 424 756 - 3 084 883 - 2 902 395 - 2 651 462

NET FINANCIAL LIABILITIES2 6 428 340 6 353 944 6 202 105 6 227 542 6 205 148

NET DEBT3 2 662 675 2 364 448 2 367 419 2 376 589 2 348 278

1 Net financial worth equals total financial assets minus total liabilities.2 Net financial liabilities equals the sum of total liabilities less total financial assets excluding investments in other public sector entities.3 Net debt equals the sum of deposits held, advances received and borrowing, minus the sum of cash and deposits, advances paid and

investments, loans and placements.

26



Table 4.3

General Government Sector Cash Flow Statement2014-15 2014-15 2015-16 2016-17 2017-18 Budget Revised Forward Estimates$000 $000 $000 $000 $000

Cash receipts from operating activitiesTaxes received 568 332 592 963 606 912 619 091 635 514Receipts from sales of goods and services 306 811 310 245 320 507 319 584 316 840Grants and subsidies received 4 169 488 4 275 043 4 286 561 4 416 164 4 332 824Interest receipts 54 826 63 313 61 871 63 114 64 904Dividends and income tax equivalents 66 042 66 042 127 526 130 209 128 339Other receipts 428 204 450 086 425 960 425 458 424 372

Total operating receipts 5 593 703 5 757 692 5 829 337 5 973 620 5 902 793Cash payments for operating activitiesPayments for employees - 2 284 642 - 2 320 572 - 2 385 212 - 2 464 334 - 2 465 160Payment for goods and services - 1 584 387 - 1 600 470 - 1 613 910 - 1 695 243 - 1 701 697Grants and subsidies paid - 1 033 761 - 1 091 772 - 1 064 497 - 1 082 020 - 1 099 717Interest paid - 248 604 - 226 284 - 258 218 - 261 436 - 267 218Other payments Total operating payments - 5 151 394 - 5 239 098 - 5 321 837 - 5 503 033 - 5 533 792

NET CASH FLOWS FROM OPERATING ACTIVITIES 442 309 518 594 507 500 470 587 369 001Cash flows from investments in non financial assetsSales of non financial assets 74 779 74 779 54 917 73 024 71 562Purchases of non financial assets - 637 342 - 651 598 - 582 283 - 570 445 - 430 732Net cash flows from investments in non financial assets - 562 563 - 576 819 - 527 366 - 497 421 - 359 170NET CASH FROM OPERATING ACTIVITIES AND

INVESTMENTS IN NON FINANCIAL ASSETS- 120 254 - 58 225 - 19 866 - 26 834 9 831

Net cash flows from investments in financial assets for policy purposes1

15 171 15 518 14 952 10 952 8 080

Net cash flows from investments in financial assets for liquidity purposes

61 799 55 799 - 29 104 - 26 860 - 75 604

NET CASH FLOWS FROM INVESTING ACTIVITIES - 485 593 - 505 502 - 541 518 - 513 329 - 426 694Net cash flows from financing activitiesAdvances received (net) 5 640 5 640 - 39 948 - 10 583 - 7 986Borrowing (net) 172 892 172 892 145 410 19 552 45 873Deposits received (net) - 409 797 - 610 149 - 9 714 - 1 538 1 763Other financing (net) NET CASH FLOWS FROM FINANCING ACTIVITIES - 231 265 - 431 617 95 748 7 431 39 650NET INCREASE/DECREASE IN CASH HELD - 274 549 - 418 525 61 730 - 35 311 - 18 043Net cash flows from operating activities 442 309 518 594 507 500 470 587 369 001Net cash flows from investments in non financial assets - 562 563 - 576 819 - 527 366 - 497 421 - 359 170CASH SURPLUS (+)/DEFICIT (-) - 120 254 - 58 225 - 19 866 - 26 834 9 831Future infrastructure and superannuation

contributions/earnings2

- 23 046 - 23 046 - 24 429 - 25 895 - 27 448

UNDERLYING SURPLUS (+)/DEFICIT (-) - 143 300 - 81 271 - 44 295 - 52 729 - 17 617Additional information to the Cash Flow StatementCASH SURPLUS (+)/DEFICIT (-) - 120 254 - 58 225 - 19 866 - 26 834 9 831Acquisitions under finance leases and similar arrangements - 521 305 - 521 305 ABS GFS SURPLUS (+)/DEFICIT (-) including finance

leases and similar arrangements- 641 559 - 579 530 - 19 866 - 26 834 9 831

1 Includes equity acquisitions, disposals and privatisations (net).2 Contributions for future infrastructure and superannuation requirements.


Table 4.4

Public Non Financial Corporation Sector Comprehensive Operating Statement2014-15 2014-15 2015-16 2016-17 2017-18


$000 $000 $000 $000 $000

REVENUE

Current grants 146 611 146 611 149 327 152 596 153 096

Capital grants 17 452 19 552 28 674 27 169 27 269

Sales of goods and services 771 083 756 185 796 040 812 866 819 020

Interest income 1 800 1 758 2 088 2 108 2 138

Other 42 486 43 189 41 871 43 136 44 873

TOTAL REVENUE 979 432 967 295 1 018 000 1 037 875 1 046 396

less EXPENSES

Employee benefits expense 113 581 110 635 116 709 128 016 132 147

Superannuation expenses 14 583 14 401 14 840 15 297 15 497


Other operating expenses 489 467 492 553 492 715 489 913 487 439


Other property expenses 26 431 26 431 36 033 30 484 19 907

Current grants

Capital grants


TOTAL EXPENSES 954 334 949 857 953 633 949 282 937 876


plus Other economic flows – included in operating result - 2 998 - 12 825 - 2 592 - 2 501 - 2 484



110 202 110 202 107 341 105 107 107 279


132 302 114 815 169 116 191 199 213 315




Sales of non financial assets - 6 - 6 864


plus Change in inventories 6 277 7 511 3 613 6 075 6 950

plus Other movements in non financial assets 16 230 16 197 16 636 17 052 17 478


equals FISCAL BALANCE - 37 825 - 36 990 7 523 46 714 15 932

28



Table 4.5

Public Non Financial Corporation Sector Balance Sheet2014-15 2014-15 2015-16 2016-17 2017-18


$000 $000 $000 $000 $000

ASSETS

Financial assets


Advances paid

Investments, loans and placements

Receivables 116 373 119 106 129 739 132 966 134 580

Equity 3 3 3 3 3


Total financial assets 197 172 227 311 233 159 237 867 241 456


Inventories 123 247 171 190 174 803 180 878 187 828


Investment property 60 175



TOTAL ASSETS 4 136 382 4 123 240 4 293 918 4 446 255 4 650 432

LIABILITIES

Deposits held 9 315 10 002 10 002 10 002 10 002

Advances received

Borrowing 1 474 975 1 431 705 1 460 777 1 460 787 1 496 548

Superannuation


Payables 59 002 48 357 51 429 49 736 50 872




Contributed equity 655 661 670 414 666 462 662 510 658 558

Accumulated surplus/(deficit) 680 925 569 271 596 060 639 453 701 058

Reserves 1 119 417 1 260 837 1 368 178 1 473 285 1 580 564

TOTAL EQUITY 2 456 003 2 500 522 2 630 700 2 775 248 2 940 180


NET DEBT2 1 403 494 1 333 505 1 367 362 1 365 891 1 399 677

1 Net financial worth equals total financial assets minus total liabilities.2 Net debt equals the sum of deposits held, advances received and borrowing, minus the sum of cash and deposits, advances paid and investments,

loans and placements.


Table 4.6

Public Non Financial Corporation Sector Cash Flow Statement2014-15 2014-15 2015-16 2016-17 2017-18 Budget Revised Forward Estimates$000 $000 $000 $000 $000

Cash receipts from operating activitiesReceipts from sales of goods and services 771 263 748 510 788 029 812 369 819 963Grants and subsidies received 164 063 166 163 178 001 179 765 180 365Interest receipts 1 797 1 761 2 088 2 108 2 138Other receipts 21 786 26 584 20 201 20 902 22 404Total operating receipts 958 909 943 018 988 319 1 015 144 1 024 870Cash payments for operating activitiesIncome tax equivalents paid - 6 625 - 6 343 - 47 576 - 31 436 - 22 171Payments for employees - 136 762 - 134 396 - 138 490 - 150 158 - 154 395Payment for goods and services - 485 795 - 485 863 - 484 659 - 488 649 - 483 299Grants and subsidies paid - 15 191 - 15 191 - 16 713 - 18 086 - 19 570Interest paid - 90 420 - 86 942 - 87 786 - 88 834 - 92 251Other payments Total operating payments - 734 793 - 728 735 - 775 224 - 777 163 - 771 686NET CASH FLOWS FROM OPERATING ACTIVITIES 224 116 214 283 213 095 237 981 253 184Cash flows from investments in non financial assetsSales of non financial assets 6 6 864 Purchases of non financial assets - 244 922 - 241 168 - 225 372 - 197 573 - 240 318Net cash flows from investments in non financial assets - 244 916 - 234 304 - 225 372 - 197 573 - 240 318NET CASH FROM OPERATING ACTIVITIES AND

INVESTMENTS IN NON FINANCIAL ASSETS- 20 800 - 20 021 - 12 277 40 408 12 866


- 9 837


NET CASH FLOWS FROM INVESTING ACTIVITIES - 244 916 - 244 141 - 225 372 - 197 573 - 240 318Net cash flows from financing activitiesAdvances received (net) Borrowing (net) 8 149 10 149 29 072 10 35 761Deposits received (net) Dividends paid - 9 731 - 9 731 - 17 628 - 34 985 - 42 700Other financing (net) - 13 171 - 13 518 - 3 952 - 3 952 - 3 952NET CASH FLOWS FROM FINANCING ACTIVITIES - 14 753 - 13 100 7 492 - 38 927 - 10 891NET INCREASE/DECREASE IN CASH HELD - 35 553 - 42 958 - 4 785 1 481 1 975Net cash flows from operating activities 224 116 214 283 213 095 237 981 253 184Net cash flows from investments in non financial assets - 244 916 - 234 304 - 225 372 - 197 573 - 240 318Dividends paid - 9 731 - 9 731 - 17 628 - 34 985 - 42 700CASH SURPLUS (+)/DEFICIT (-) - 30 531 - 29 752 - 29 905 5 423 - 29 834Additional information to the Cash Flow StatementCASH SURPLUS (+)/DEFICIT (-) - 30 531 - 29 752 - 29 905 5 423 - 29 834Acquisitions under finance leases and similar arrangements ABS GFS SURPLUS (+)/DEFICIT (-) including finance

leases and similar arrangements- 30 531 - 29 752 - 29 905 5 423 - 29 834

1 Includes equity acquisitions, disposals and privatisations (net).

30



Table 4.7

Non Financial Public Sector Comprehensive Operating Statement2014-15 2014-15 2015-16 2016-17 2017-18


$000 $000 $000 $000 $000

REVENUE

Taxation revenue 559 465 584 224 598 151 610 180 626 603

Current grants 3 930 575 4 032 172 4 054 774 4 180 215 4 217 632

Capital grants 239 932 245 990 242 978 245 049 124 892

Sales of goods and services 1 000 602 994 550 1 047 358 1 062 998 1 066 193

Interest income 54 826 63 313 61 871 63 114 64 934

Dividend and income tax equivalent income 59 165 59 165 61 805 63 466 64 198

Other 251 604 273 914 248 319 249 073 249 715

TOTAL REVENUE 6 096 169 6 253 328 6 315 256 6 474 095 6 414 167

less EXPENSES

Employee benefits expense 2 106 956 2 137 651 2 173 009 2 235 749 2 246 406

Superannuation expenses

Superannuation interest cost 120 270 120 270 142 840 164 260 165 045

Other superannuation expenses 230 417 232 530 232 580 226 140 207 185


Other operating expenses 1 773 267 1 794 842 1 813 376 1 891 535 1 891 245


Other property expenses

Current grants 741 199 795 237 743 069 766 395 789 943

Capital grants 64 524 68 607 53 236 41 523 33 289


TOTAL EXPENSES 6 025 756 6 116 468 6 137 018 6 307 153 6 326 542


plus Other economic flows – included in operating result 18 001 8 174 19 938 21 158 22 101



542 960 542 992 351 197 168 484 170 886


631 374 688 026 549 373 356 584 280 612




Sales of non financial assets - 74 785 - 81 643 - 54 917 - 73 024 - 71 562


plus Change in inventories 6 277 7 511 3 613 6 075 6 950

plus Other movements in non financial assets 499 987 499 954 16 636 17 052 17 478


equals FISCAL BALANCE - 722 608 - 659 713 - 78 508 - 39 075 - 24 574


Table 4.8

Non Financial Public Sector Balance Sheet2014-15 2014-15 2015-16 2016-17 2017-18


$000 $000 $000 $000 $000

ASSETS

Financial assets


Advances paid 220 602 201 554 190 554 183 554 179 426

Investments, loans and placements 1 245 840 1 501 903 1 543 950 1 584 522 1 674 654

Receivables 244 676 321 135 331 261 334 172 336 518

Equity

Investments in other public sector entities 483 872 428 666 486 522 549 899 613 506

Investments – other 103 3 3 3 3


Total financial assets 2 391 034 2 694 830 2 855 589 2 920 138 3 054 052


Inventories 133 807 182 478 186 091 192 166 199 116


Investment property 144 753 85 786 82 379 79 222 76 065



TOTAL ASSETS 18 318 656 18 454 078 18 989 167 19 375 441 19 739 622

LIABILITIES

Deposits held 122 531 93 114 88 185 85 166 84 954

Advances received 360 096 345 095 305 147 294 564 286 578

Borrowing 5 245 925 5 204 770 5 379 252 5 398 814 5 480 448

Superannuation 3 040 806 3 239 056 3 078 003 3 091 784 3 095 895


Payables 201 340 227 168 230 931 229 367 231 505




Contributed equity

Accumulated surplus/(deficit) 1 899 918 1 710 687 2 094 863 2 282 963 2 392 689

Reserves 6 600 029 6 727 876 6 893 073 7 061 557 7 232 443

NET WORTH 8 499 947 8 438 563 8 987 936 9 344 520 9 625 132


NET FINANCIAL LIABILITIES2 7 911 547 7 749 351 7 632 164 7 660 682 7 673 944

NET DEBT3 4 066 169 3 697 953 3 734 781 3 742 480 3 747 955

1 Net financial worth equals total financial assets minus total liabilities.2 Net financial liabilities equals the sum of total liabilities less total financial assets excluding investments in other public sector entities.3 Net debt equals the sum of deposits held, advances received and borrowing, minus the sum of cash and deposits, advances paid and investments,

loans and placements.

32



Table 4.9

Non Financial Public Sector Cash Flow Statement2014-15 2014-15 2015-16 2016-17 2017-18 Budget Revised Forward Estimates$000 $000 $000 $000 $000

Cash receipts from operating activitiesTaxes received 559 465 584 224 598 151 610 180 626 603Receipts from sales of goods and services 1 045 843 1 031 062 1 084 408 1 107 562 1 112 197Grants and subsidies received 4 170 507 4 278 162 4 297 752 4 425 264 4 342 524Interest receipts 54 829 63 316 61 874 63 114 64 934Dividends and income tax equivalents 50 082 50 082 62 309 63 782 63 466Other receipts 449 692 476 346 445 904 446 094 446 501Total operating receipts 6 330 418 6 483 192 6 550 398 6 715 996 6 656 225

Cash payments for operating activities

Payments for employees - 2 412 776 - 2 446 240 - 2 514 931 - 2 605 578 - 2 610 641Payment for goods and services - 2 037 810 - 2 058 419 - 2 074 181 - 2 159 232 - 2 160 116Grants and subsidies paid - 885 908 - 943 919 - 914 400 - 929 441 - 948 622Interest paid - 337 230 - 311 468 - 343 919 - 348 162 - 357 361Other payments Total operating payments - 5 673 724 - 5 760 046 - 5 847 431 - 6 042 413 - 6 076 740NET CASH FLOWS FROM OPERATING ACTIVITIES 656 694 723 146 702 967 673 583 579 485Cash flows from investments in non financial assetsSales of non financial assets 74 785 81 643 54 917 73 024 71 562Purchases of non financial assets - 882 264 - 892 766 - 807 655 - 768 018 - 671 050Net cash flows from investments in non financial assets - 807 479 - 811 123 - 752 738 - 694 994 - 599 488NET CASH FROM OPERATING ACTIVITIES AND

INVESTMENTS IN NON FINANCIAL ASSETS- 150 785 - 87 977 - 49 771 - 21 411 - 20 003


2 000 - 7 837 11 000 7 000 4 128


61 799 55 799 - 29 104 - 26 860 - 75 604

NET CASH FLOWS FROM INVESTING ACTIVITIES - 743 680 - 763 161 - 770 842 - 714 854 - 670 964Net cash flows from financing activitiesAdvances received (net) 5 640 5 640 - 39 948 - 10 583 - 7 986Borrowing (net) 181 041 183 041 174 482 19 562 81 634Deposits received (net) - 374 244 - 567 193 - 4 929 - 3 019 - 212Other financing (net) NET CASH FLOWS FROM FINANCING ACTIVITIES - 187 563 - 378 512 129 605 5 960 73 436NET INCREASE/DECREASE IN CASH HELD - 274 549 - 418 527 61 730 - 35 311 - 18 043

Net cash flows from operating activities 656 694 723 146 702 967 673 583 579 485Net cash flows from investments in non financial assets - 807 479 - 811 123 - 752 738 - 694 994 - 599 488CASH SURPLUS (+)/DEFICIT (-) - 150 785 - 87 977 - 49 771 - 21 411 - 20 003Future infrastructure and superannuation

contributions/earnings2

- 23 046 - 23 046 - 24 429 - 25 895 - 27 448

UNDERLYING SURPLUS (+)/DEFICIT (-) - 173 831 - 111 023 - 74 200 - 47 306 - 47 451Additional information to the Cash Flow StatementCASH SURPLUS (+)/DEFICIT (-) - 150 785 - 87 977 - 49 771 - 21 411 - 20 003Acquisitions under finance leases and similar arrangements - 521 305 - 521 305 ABS GFS SURPLUS (+)/DEFICIT (-) including finance

leases and similar arrangements- 672 090 - 609 282 - 49 771 - 21 411 - 20 003

1 Includes equity acquisitions, disposals and privatisations (net).2 Contributions for future infrastructure and superannuation requirements.


Table 4.10

General Government Sector Taxes

2014-15

Budget

2014-15

Revised

2015-16

Forward

Estimate

$M $M $M

Taxes on employers’ payroll and labour force 245 259 262

Payroll taxes 245 259 262

Taxes on property 142 150 153

Stamp duties on financial and capital transactions 142 150 153

Taxes on the provision of goods and services 111 113 118

Taxes on gambling 64 66 69

Taxes on insurance 47 47 49

Taxes on the use of goods and performance of activities 71 72 74

Motor vehicle registration fees 71 72 74

TOTAL TAXES 569 593 607

Table 4.11

2014-15 Loan Council Allocation Budget-Time

Estimate

Mid-Year

Estimate

$M $M

General government sector cash deficit (+)/surplus (-) 120 58

Public non financial corporations sector cash deficit (+)/surplus (-) 31 30

Non financial public sector cash deficit (+)/surplus (-) 151 88

less Acquisitions under finance leases and similar arrangements - 521 - 521

equals ABS GFS cash deficit (+)/surplus (-) 672 609

less Net cash flows from investments in financial assets for policy purposes 2 - 8

plus Memorandum items

2014-15 LOAN COUNCIL ALLOCATION 670 617

34


35Appendix A

Appendix A Classification of Entities in the Northern Territory

Non Financial Public SectorGeneral Government

Aboriginal Areas Protection AuthorityAuditor-General’s OfficeAustralAsia Railway Corporation1

Batchelor Institute of Indigenous Tertiary Education1

Central Australia Health Service2

Central Holding AuthorityDarwin Waterfront Corporation1

Data Centre Services2

Department of Arts and Museums Department of the Attorney-General and JusticeDepartment of BusinessDepartment of the Chief MinisterDepartment of Children and FamiliesDepartment of Community Services Department of Corporate and Information ServicesDepartment of Correctional ServicesDepartment of Education Department of HealthDepartment of HousingDepartment of InfrastructureDepartment of Land Resource ManagementDepartment of Lands, Planning and the EnvironmentDepartment of the Legislative AssemblyDepartment of Local Government and RegionsDepartment of Mines and EnergyDepartment of Primary Industry and FisheriesDepartment of Sport, Recreation and RacingDepartment of TransportDepartment of Treasury and FinanceDesert Knowledge Australia1

Museums and Art Galleries Board of the Northern Territory1

Nominal Insurer’s Fund1

Northern Territory Electoral CommissionNorthern Territory Legal Aid Commission1

Northern Territory Major Events Company Pty Ltd1

Northern Territory Police, Fire and Emergency ServicesNT Build Statutory Corporation1

NT Fleet2

NT Home Ownership2

Office of the Commissioner for Public EmploymentOmbudsman’s OfficeParks and Wildlife Commission of the Northern TerritoryTerritory Wildlife Parks2

Top End Health Service2

Tourism NT

Public Non Financial CorporationsDarwin Bus Service2,3

Darwin Port Corporation2

Indigenous Essential Services Pty Ltd1

Land Development Corporation2

Power and Water Corporation1,4

Territory Generation1,4

Jacana Energy1,4

1 Non budget sector entity.2 Government business division.3 Will cease operating as a Government business division in 2014-15.4 Government owned corporation.

36


Appendix B

Appendix B GlossaryAdvances/Advances PaidLoans acquired for policy rather than liquidity management purposes. Included are long-term and short-term loans, non-marketable debentures and long and short-term promissory agreements (bonds and bills) issued to public sector units for achieving government policy objectives.

AgencyA unit of government administration, or office or statutory corporation, nominated in an Administrative Arrangements Order for the purposes of the Financial Management Act and including, where the case requires, a part or division (by whatever name called) of an agency.

Australian Accounting StandardsStatements of accounting standards that can be applied in preparation and presentation of financial statements.

Capital GrantsTransactions in which the ownership of an asset (other than cash and inventories) is transferred from one institutional unit to another, in which cash is transferred to enable the recipient to acquire another asset, or in which the funds realised by the disposal of another asset are transferred, for which no economic benefits of equal value are receivable or payable in return.

Cash Surplus/DeficitReported in the Cash Flow Statement that measures the net impact of cash flows during the period. It equals net cash flows from operating activities plus net cash flows from acquisition and disposal of non financial assets, less distributions paid less value of assets acquired under finance leases and similar arrangements.

Commonwealth Own-Purpose Expenses Payments by the Commonwealth for goods and services and associated transfer payments for the conduct of its general government activities.

Comprehensive ResultThe net result of all items of income and expense recognised for the period. It is the aggregate of operating result and other movements in equity, other than transactions with owners as owners.

Consumer Price IndexA general indicator of the prices paid by household consumers for a specific basket of goods and services.

Contingent LiabilityA potential financial obligation arising out of a condition, situation, guarantee or indemnity, the ultimate effect of which will be confirmed only on the occurrence or non-occurrence of one or more uncertain future events.

Current GrantsAmounts payable or receivable for current purposes for which no economic benefits of equal value are receivable or payable in return.

Finance LeaseLease agreements that transfer substantially all the risks and benefits relating to ownership of an asset from the lessor (legal owner) to the lessee (party using the asset).

37Appendix B

Financial AssetAny asset that is:

• cash;

• an equity instrument of another entity;

• a contractual right:

– to receive cash or another financial asset from another entity; or

– to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity; or

• a contract that will or may be settled in the entity’s own equity instruments and is:

– a non-derivative for which the entity is or may be obliged to receive a variable number of the entity’s own equity instruments; or

– a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments.

For this purpose, the entity’s own equity instruments do not include instruments that are themselves contracts for the future receipt or delivery of the entity’s own equity instruments.

Fiscal Balance Fiscal balance, also referred to as net lending/borrowing, is an operating statement measure that differs from the net operating balance as it includes spending on capital items but excludes depreciation. A net lending (or fiscal surplus) balance indicates that a government is saving more than enough to finance all its investment spending. A net borrowing (or fiscal deficit) position indicates that a government’s level of investment is greater than its level of savings.

General Government SectorDefined in Government Finance Statistics as an entity or group of entities that are mainly engaged in the production of goods and/or services outside the normal market mechanism. Goods and services are provided free of charge or at nominal charges well below costs of production.

Generally Accepted Accounting Principles Term used to describe broadly the body of principles that governs the accounting for financial transactions underlying the preparation of a set of financial statements.

GST RevenueOn 1 July 2000, the Commonwealth introduced the GST. Payments from the Commonwealth return GST revenue to the states and territories, replacing the previous general purpose grants.

Government Business DivisionA Territory-controlled trading entity that follows commercial practices and is required to comply with competitive neutrality principles.

Government Finance StatisticsRefers to statistics that measure the financial transactions of governments and reflect the impact of those transactions on other sectors of the economy. Government finance statistics in Australia are developed by the Australian Bureau of Statistics in conjunction with all governments and are mainly based on international statistical standards developed, in consultation with member countries, by the International Monetary Fund.

38


Appendix B

Government Owned CorporationAn entity of which its objectives are to operate at least as efficiently as any corporate business and maximise sustainable return to government. The Government Owned Corporations Act adopts the shareholder model of corporate governance. The Territory has three government owned corporations namely Power and Water Corporation, Power Generation Corporation (Territory Generation) and Power Retail Corporation (Jacana Energy).

GrantsTransactions in which one unit provides goods, services, assets (or extinguishes a liability) or labour to another unit without receiving approximately equal value in return. Grants can either be of a current or capital nature (see current grants and capital grants).

Grants can be paid as general purpose grants, which refer to grants that are not subject to conditions regarding their use. Alternatively, they may be paid as specific purpose grants, which are paid for a particular purpose and/or have conditions attached regarding their use.

Grants for On-PassingAll grants paid to one institutional sector (for example, a state general government) to be passed on to another institutional sector (for example, local government or a non-profit institution).

Gross Domestic Product The total value of goods and services produced in Australia over the period for final consumption. Intermediate goods, or those used in the production of other goods, are excluded. Gross domestic product can be calculated by summing total output, total income or total expenditure.

Gross State ProductSimilar to gross domestic product, except it measures the total value of goods and services produced in a jurisdiction. It is the sum of all income, namely wages, salaries and profits, plus indirect taxes less subsidies. It can also be calculated by measuring expenditure, where it is the sum of state final demand and international and interstate trade, changes in the level of stocks and a balancing item.

GuaranteeAn undertaking to answer for the debt or obligations of another person or entity.

IndemnityA written undertaking to compensate, protect or insure another person or entity against future financial loss, damage or liability.

Loan Council The Australian Loan Council coordinates borrowing by Commonwealth and state governments. Current arrangements seek to emphasise transparency of public sector finances, through financial market scrutiny of proposed borrowing to restrict borrowing to prudent levels.

Loan Council Allocation The nomination to the Loan Council of the level of financing required.

Memorandum Items – Loan CouncilMemorandum items are used to adjust the cash surplus/deficit to include in the Loan Council Allocation certain transactions that may have the characteristics of public sector borrowings but do not constitute formal borrowings.

39Appendix B

National Partnership AgreementsNational Partnership agreements are agreements between the Commonwealth, states and territories with defined objectives, outcomes, outputs and performance measures related to the delivery of projects, of national significance or to facilitate reforms.

Net Acquisition/(Disposal) of Non Financial Assets from TransactionsPurchases (or acquisitions) of non financial assets less sales (or disposals) of non financial assets less depreciation plus changes in inventories and other movements in non financial assets.

Purchases and sales (or net acquisitions) of non financial assets generally include accrued expenses and payables for capital items. Purchases exclude non-produced assets and valuables, which are included in other movements in non financial assets.

Net Actuarial GainsIncludes actuarial gains and losses on defined benefit superannuation plans.

Net Cash Flows from Investments in Financial Assets (Liquidity Management Purposes)Cash receipts from liquidation or repayment of investments in financial assets for liquidity management purposes less cash payments for such investments. Investment for liquidity management purposes means making funds available to others with no policy intent and with the aim of earning a commercial rate of return.

Net Cash Flows from Investments in Financial Assets (Policy Purposes) Cash receipts from the repayment and liquidation of investments in financial assets for policy purposes less cash payments for acquiring financial assets for policy purposes. Acquisition of financial assets for policy purposes is distinguished from investments in financial assets (liquidity management purposes) by the underlying government motivation for acquiring the assets. Acquisition of financial assets for policy purposes is motivated by government policies such as encouraging the development of certain industries or assisting citizens affected by natural disasters.

Net DebtNet debt measures a government’s net stock of selected gross financial liabilities less financial assets.

Net debt equals the sum of deposits held, advances received, government securities, loans and other borrowing less the sum of cash and deposits, advances paid and investments, loans and placements.

Net Financial LiabilitiesTotal liabilities less financial assets, other than equity in public non financial corporations and public financial corporations. This measure is broader than net debt as it includes significant liabilities, other than borrowings (for example, accrued employee liabilities such as superannuation and long service leave entitlements). For the public non financial corporation and public financial corporation sectors, it is equal to negative net financial worth.

Net Financial WorthA measure of a government’s net holdings of financial assets. It is calculated from the Uniform Presentation Framework Balance Sheet as financial assets minus liabilities. Net financial worth is a broader measure than net debt as it incorporates provisions (such as superannuation, but excludes depreciation and doubtful debts) as well as holdings of equity. Net financial worth includes all classes of financial assets and liabilities.

40


Appendix B

Net Operating Balance The revenue from transactions minus expenses from transactions. It is a summary measure of the ongoing sustainability of operations and excludes gains and losses resulting from changes in price levels and other changes in the volume of assets. It is the component of the change in net worth that is due to transactions and can be attributed directly to government policies.

Net WorthProvides a relatively comprehensive picture of a government’s overall financial position. It is calculated as total assets less total liabilities less shares and other contributed capital. It includes a government’s non financial assets such as land and other fixed assets, which may be sold and used to repay debt, as well as its financial assets and liabilities including debtors, creditors and superannuation liabilities. Net worth also shows asset acquisitions over time, giving an indication of the extent to which borrowings are used to finance asset purchases, rather than only current expenditure.

Non Financial AssetsAssets that are not financial assets, predominantly land and other fixed assets.

Non Financial Public SectorThe sector formed through a consolidation of the general government and public non financial corporation subsectors.

Other Economic FlowsChanges in the volume or value of an asset or liability that do not result from transactions (such as revaluations and other changes in the volume of assets).

Other Superannuation ExpenseIncludes all superannuation expenses from transactions except superannuation interest cost. It generally includes current service cost, which is the increase in entitlements associated with the employment services provided by employees in the current period. Superannuation actuarial gains/losses are excluded as they are considered other economic flows.

PayablesIncludes short-term and long-term trade debt and accounts payable, grants and interest payable.

Public Financial CorporationsGovernment-controlled entities that perform central bank functions, and/or have the authority to incur liabilities and acquire financial assets in the market on their own account.

Public Non Financial CorporationsPublic enterprises primarily engaged in the production of goods or services of a non financial nature, for sale in the market place, at prices that aim to recover most of the costs involved.

ReceivablesIncludes short-term and long-term trade credit and accounts receivable, grants, taxes and interest receivable.

Sale of Goods and ServicesRevenue from the direct provision of goods and services and includes fees and charges for services rendered, sale of goods and services, fees from regulatory services and work done as an agent for private enterprises. It also includes rental income under operating leases and on produced assets such as buildings and entertainment, but excludes rental income from the use of non-produced assets such as land. User charges include sale of goods and services revenue.

41Appendix B

Specific Purpose PaymentsA Commonwealth financial contribution to support state delivery of services in a particular sector. Payments are made from the Commonwealth Treasury to state treasuries and are appropriated to the relevant Northern Territory agency.

State Final DemandFinal consumption expenditure plus gross fixed capital formation in each jurisdiction. It represents the total expenditure on consumption and investment in a jurisdiction.

Superannuation Interest CostThe expense resulting from increase in the liability due to the fact that, for all participants in the scheme, retirement (and death) is one year nearer, and so one fewer discount factors must be used to calculate the present value of the benefits for each future year. Interest cost is the increase during a period in the present value of a defined benefit obligation that arises because the benefits are one period closer to settlement, as per the relevant accounting standard. The cost is measured net of the actuarial return on plan assets of defined benefit schemes calculated using an actuarially determined long-term rate of return.

Tax Equivalents RegimeThe mechanism to ensure that government business divisions and government owned corporations incur similar tax liabilities to privately owned organisations. Thus, greater parity exists between the cost structures of government-controlled trading entities and the private sector, aiding in the achievement of competitive neutrality.

Treasurer’s AdvanceAn appropriation purpose of that name as specified in an Appropriation Act, which provides a pool of funds specifically set aside in each Budget to meet operational contingencies that arise during the year.

Uniform Presentation FrameworkA uniform framework agreed by the Australian Loan Council in 2000, which is a revision of the agreement reached at the 1991 Premiers’ Conference. The Uniform Presentation Framework (UPF) was further updated and re-issued in April 2008 to incorporate accounting standard AASB 1049 Whole of Government and General Government Sector Financial Reporting. The UPF specifies that the Commonwealth, state and territory governments will present a minimum set of budget and financial outcome information on the Government Finance Statistics basis according to an agreed format and specified Loan Council reporting arrangements.

Documents

2014‑15 Mid‑Year Report · The projections are presented in accordance with the Uniform Presentation Framework. Jodie Ryan Under Treasurer 22 November 2014. Overview 1. Chapter